Poor, middle class, or rich?

We’ve outgrown the class descriptors that worked for our parents and grandparents Can't view this email properly? [View in Browser]() Hey {NAME}, Do you identify as poor, middle class, or rich? If you felt the urge to grab a Sharpie and scribble “D: None of the above,” you’re not alone. It’s just not that simple anymore. We’ve outgrown the class descriptors that worked for our parents and grandparents — especially since the COVID pandemic, which upended the finances of tens of thousands of families from “comfortable” to “just barely making it.” Nearly HALF of non-retired American adults reported that the pandemic negatively impacted their financial progress: Research data Source: [Pew]() We need a new framework for understanding how money affects our lives. So I made one. I call it [the Trapped Class, the Treadmill Class, and the Freedom Class](). What does “middle class” actually mean? The way we think about economic class in America makes no sense. We divide society up into the poor, the middle class, and the rich. There’s just one issue: Everyone thinks they’re middle class! Nobody wants to say “I’m poor” or “I’m rich.” But people routinely say, “I’m middle class” — even when they earn multiple six figures. The current definition of “middle class” [tops out around $145,500/year]() for a three-person household. But God forbid you tell someone who earns $300,000 that they’re actually not part of the middle class. Suddenly, you’ll unlock a rant about their high-cost-of-living city, their taxes, the price of sending their kids to tennis classes…and on and on. They may be right about all those high expenses. But according to the framework we’re used to, they’re still rich. To them, it just doesn’t feel like it. [Podcast]() Check out [my podcast episode with Bebe and Paul]() to see what it’s like to make 6 figures and still feel like you’re up against the wall. This is why we need another way to look at economic class. Being rich isn’t simply about making a certain dollar amount. There are people earning $500,000 a year and drowning in bills. There are also people making $50K who feel happy and free. You can’t evaluate your standing by looking at your income or net worth only. It just doesn’t show the whole picture. Look through this more nuanced lens To understand what economic class you’re in, evaluate your lifestyle. In other words…how do you choose to spend the money you have? A Rich Life is about FREEDOM and FLEXIBILITY. You can be rich on $50,000/year if you’ve created a life full of things you love — whether that’s spending more time with family, eating sushi every week, or teaching drawing. Examples of a rich life That's why I proposed a new framework for thinking about class. It’s built on lifestyle, which you can intentionally design for yourself. Note: These classes don’t justify [massive inequality and systemic problems](), which are extremely real problems that continue to grow. This framework simply provides a back-of-the-napkin “lens” through which to view your financial state. Where do you see yourself? TRAPPED CLASS: You’re stuck working paycheck to paycheck, one accident away from financial disaster. There is no “buffer,” no time to think ahead or plan for the long term. TREADMILL CLASS: You have a decent job and a small bit of savings. If you live in America, the treadmill isn’t bad. You have a roof, a car, internet, pizza delivery anytime…and can vacation once yearly. But you’re stuck. And getting off the treadmill is more of a dream, not a plan. You usually have some credit card debt, and you aren’t saving enough for retirement. You’re likely to spend most of your life working just to stay afloat. FREEDOM CLASS: You have the ability to do what you want, when you want. Money is no longer a major constraint in your life. In fact, cost is rarely the first thing you consider. More often? It’s time, quality, experience, relationships, or simply what you want. (I’m not just talking about billionaires and trust fund babies, even though they get all the spotlight. A growing wave of people are living this life…by building small, automated businesses that support their lives.) The key insight here: Being rich is not about how much money you have. It’s how much flexibility and freedom you have. "One summer I was able to spend six weeks in the south of France with my family. My wife and two daughters stayed in Airbnbs in Provence for a month, and I stayed an extra two weeks to visit a friend in London. From there, I cycled up the French Pyrenees Mountains during the Tour de France (and got to watch the race in person multiple days!). All the while I didn't need to work except for about two hours per week to check in on things and answer a few emails." – Graham Cochrane Here’s a story a reader sent me during the pandemic: IWT Success Stories This reader was a new grad who had just started working. He only saved up a few months of emergency savings, but that cushion made all the difference. Instead of wondering how he'd pay the rent or buy groceries, he could adjust to a drop in his work without worry. That’s real financial freedom: freedom from worry. What can you do about it? If you’ve read this far and you’re feeling stressed, take a deep breath and focus on what you can control. Build a plan for taking control of your money: - Build up your emergency savings. - If you have an emergency fund, and you can afford to — keep investing, like I recommend [in my book](). - Start thinking about how you’ll earn more. Nobody’s coming to rescue you. Or hand you a second income stream. YOU have to decide to build it for yourself. If you want to start a business, START NOW so you can benefit later. You don’t have to have every detail figured out in advance. It's actually better to start small, follow a system, make mistakes, and learn as you go. I want you to head into this year with a plan to join the Freedom Class. The first step of that plan? [Join Earnable Live before it closes tomorrow](). [Signature] P.S. A week from today, our monthly call inside Earnable Live will feature a group of Earnable student businesses going head to head in my Ultimate Business Showdown. The winner will be featured in the IWT newsletter. Want to be on that private call? [Claim your spot in]()[Earnable Live](). [Programs]() [Podcast]() [Netflix show]() [Books]() [Website]() [IG]() [in]() [X]() [YT]() Was this forwarded to you? [Sign up here](). [Unsubscribe here](. 548 Market St #89946 San Francisco, CA 94104-5401